16 States Where Extremely High Payday Loan Interest Rates Are Strictly Prohibited

There are 16 states that have imposed several legal restrictions to combat high cost credit. Lenders in these states and in the District of Columbia are prohibited to charge extremely high payday loan interest rates from borrowers. If you have borrowed payday loan in these states and you find out that your lender is involved in unfair practices and that they have violated some of the laws (mentioned below), you can file your complaint against it. . The remaining 34 states have also enforced certain legal restrictions but they are not as strict as they are in these 16 states. You can . Always remember, the more informed you are about the laws and your legal rights, the better you can protect yourself against debt traps.

Georgia (GA)

Georgia has explicitly banned payday lending programs. Any attempt to offer these types of loans in this state is considered as a serious legal offense, a violation of racketeering laws. Industrial loan act applies here. Small loan rate cap in this state is 16% per annum. Criminal usury cap is 60% per year.

New York (NY)

Though payday lending is prohibited, licensed lender law also applies. Licensed lenders may offer these types of loans but the payday loan interest rates must be agreed to by a contract. It is illegal for a check casher licensee to offer short-term cash advances or charge money on a post dated check; the only exception can be a payroll check, where certain fees may be charged. As per the criminal law statute, the annual percentage rate may not be higher than 25% in any case.

New Jersey (NJ)

Check cashing licensees are strictly prohibited from cashing or advancing money on a postdated check. However, since the consumer loan act is also applicable, licensed lenders may offer payday loans, but the rates must be set by a mutual agreement with the borrower. In any case, as per the criminal usury statute, the rate must not exceed 30% per annum.

Arkansas (AR)

Though payday lending is otherwise prohibited, check cashers are allowed to offer short-term cash advances to consumers. The maximum amount of loan they can offer is $400. The repayment period must be at least 6 days and not longer than 31 days. The maximum fees lenders can charge is 10% of the total loan amount plus $10. Besides that, there can also be $5 ID card charge. The charges on a $100 loan for 14 days should not exceed $22.22. It means, the APR for a $100 loan for a 14-day period can be as much as 579%. However, it is very important for you to keep in mind that a Supreme Court judgment has passed in 2008, where it has been ruled that though the Check Cashers Act in the Arkansas seem to authorize extremely high payday loan interest rates, it is still a violation of the constitutional usury cap applicable in this state. After this judgment and after the public enforcement by private litigation and by the Attorney General, payday lending activities have almost stopped in this state.

Ohio (OH)

Since the enforcement of the lowest-cost payday loan law in the year 2008, the annual percentage rate on these types of short-term cash advances has been capped at 28% per annum. The maximum amount of loan lenders can offer is $500. The repayment term may not be less than 31 days in any case.

New Hampshire (NH)

New Hampshire has also enacted the lowest cost payday lending code and has restricted the interest rates to 36% per year. The borrowers must be allowed at least 7-30 days to make the repayment. The maximum amount of loan lenders can offer in this state is $500.

Maine (ME)

Though these lending programs are otherwise prohibited, yet they are permitted for supervised lenders. As per 32 M.R.S.A. 6138(4)(D), check cashers are strictly prohibited from advancing or cashing any money on a postdated check. However, supervised Lenders are exempt from this legal restriction. Extremely high payday loan interest rates though are still prohibited. As per the Uniform Consumer Credit Code, small loan companies may not charge more than 30% per annum as interest (for loans up to $2000). But here, it is very important for you to keep in mind that the state laws also allow tiered fees for licensed lenders, as per which, a fee of $5 may be charged for the first $75, $15 for the amount above $75 but up to $249, and or $25 for the amount above $249. This way, the interest rates may still be as much as 261% for a $250 loan borrowed for two weeks. Thus, though officially, extremely high rates are not allowed, it can still happen in Maine.

Arizona (AZ)

Payday lending is defacto prohibited (not specifically authorized) through the small loan rate cap of 36% per annum plus an additional fee of 5%.

Connecticut (CT)

Payday lending is defacto prohibited (not specifically authorized). The small loan rate cap is 30.03% per annum or a lump sum charge of $17 on every $100 up to $600. The charges must not be higher than $11 for every $100 (above $600) up to $1,800.

Massachusetts (MA)

Payday lending is defacto prohibited (not specifically authorized). Small loan act applies. The laws specifically prohibit check cashers from offering these types of loans. But those who are licensed under the small loan act may offer short-term cash advances. The small loan rate cap is 23% plus an additional administrative fee of $20. The administration fee is applicable after the loan is approved.

Oregon (OR)

Payday lending is not completely prohibited in Oregon. The state laws allow lenders to offer loans based on checks held for deposit, but they may not charge extremely high payday loan interest rates. The maximum fees lenders can charge is 36% per annum as interest plus $10 for every $100 of loan as fee, but the total fees may not exceed $30. Besides that, the charges on a $100 loan for 14 days may not be higher than $13 for a loan with a 31-day repayment period. The repayment period must be at least 31 days. The annual percentage rate for a $100 loan for a 14-day period can thus be up to 156% for a 31-day loan. There are no specific provisions regarding the maximum amount of loan lenders can offer.

Maryland (MD)

Payday lending is defacto prohibited (not specifically authorized) in this state also. The small loan rate cap is up to 2.75% per month and up to 33% per year.

North Carolina (NC)

Payday lending is defacto prohibited (not specifically authorized) in North Carolina also. The consumer finance act applies in this state. The small loan rate cap is 36% per annum.

Vermont (VT)

Payday lending is defacto prohibited (not specifically authorized). Small loan act applies in this state also. The small loan rate cap is 18% per annum.

Pennsylvania (PA)

Payday lending is defacto prohibited (not specifically authorized). As per Check Cashing Licensing Act of 1998, 505(a), Check cashers are strictly prohibited from offering payday loans in this state. Otherwise, the consumer discount company act applies. The small loan rate cap is 24% per annum.

Payday lending is defacto prohibited (not specifically authorized). Small loan act applies in West Virginia. Extremely high payday loan interest rates are specifically prohibited even if these loans are being offered under different names. The small loan rate cap is 31% per annum on every loan of $2,000.

5 Responses to “16 States Where Extremely High Payday Loan Interest Rates Are Strictly Prohibited”

[...] In order to protect the rights and interests of consumers against predatory payday lending, the payday loan law in different states has imposed certain legal restrictions on loan terms, such as the maximum amount of loan a lender can offer, the length of the repayment period, and the maximum rates and fees that can be charged. Some states have even made these types of loan programs illegal. Others have strictly prohibited extremely high rates. Still, there are many states, where lenders are allowed to charge an unreasonably very high rate, but in most cases, there is a maximum cap. If you find out that your payday lender is charging you more than the legal limit allowed by your state or is violating any other provisions, you must file a complaint with your state authority. Click here to know where you can file a complaint against a payday lender in your state. Please note that the following list is about the payday loan laws in those 34 states where this type of lending is legal. For details on those 16 states where payday lending is prohibited, you can click here. [...]

[...] can file a complaint with your state authority. It is also important to note that there are a few states, where payday lending is completely prohibited. On the other hand, most of other states where this type of lending is legal have imposed certain [...]

[...] debt settlement programs. Almost every state has some specific laws to regulate payday lending. 16 states have even made this type of lending illegal. If you are living in Georgia and applying for a payday [...]

The article can help every one who is going to take any loan whether a payday loan or any other such loan. 16 states are there in US from where you can get the help in saving yourself from very high interest rate. The remaining states also have many legal laws to restrict interest rate but 16 states are doing it very strictly. Some states like GA has banned payday lending completely. No body can even offer such type of loans whereas in AZ, CT, MA etc, payday lending is not specifically authorized but the interest rate must be kept towards the lower side only. It sounds really good that some states care for its people a lot; they really treat their people very positively. As mentioned in the article, there were some discrepancies in the laws of the state of Arkansas but now the payday lending is completely banned in this state, because people living on monthly pay check get attracted by these pay day loans and their lives become horrible due to these loans. If it will not be available to such people they will try to arrange the money from some other reliable source and so can save their precious money as well as their lives.